Wednesday, March 26, 2014: With the blazing tax feud between smartphone maker Nokia and Tamil Nadu’s (TN) tax department, the Finnish company had famously expressed that the claim is “absurd”. Consequent to that, Nokia has reduced its manufacturing of mobile phones from the Chennai-based Sriperumbudur plant. The cut back was executed silently and reportedly happened a few weeks back. Now, it runs a two-shift operation as against to the three-shift operation.
Nokia’s biggest handset manufacturing unit in the world saw this major cut back in-line with the TN’s tax claim of 300 million Euros, in a tax case filed with the Supreme Court (SC) of India. SC ordered Nokia to submit a Rs 35 billion bank guarantee, and forgo of its rights before its deal with Microsoft.
According to a TOI report, G Udayakumar, advisor to Nokia trade union said, “Overall production has dropped from 13 million handsets a month to just 4 million now. Production is getting diverted to other Nokia plants like Vietnam and China.”
A Nokia plant employee added that the manufacturing has been restricted, due to lesser demands. “Already, there is a lot of uncertainty over the fate of the plant, but with production cuts, there is panic amongst workers,” added the employee. Also, Nokia has raised the number of non-production days in a span of a few months, with ceasing production to five days a week.
Nokia has remained tight lipped post the SC verdict, and the company is exploring a common ground to satisfy the Indian judiciary. Considering the SC ruling, its board in Finland is likely to meet this week to reckon its options. It is to be noted, Nokia does not comply with Tamil Nadu over the massive tax, but is only following SC verdict.
